The oral argument in Hobby Lobby and Conestoga Wood, which I
attended today, provided some slight cause for optimism for those of us who have been arguing that accommodating the companies would
raise serious concerns because it would mean shifting the cost of that
accommodation onto third parties (the affected women employees). Not only did
Solicitor General Verrilli open and close with the argument, but Justice
Kennedy arguably displayed some sympathy for the point. First, Justice Kennedy
asked Paul Clement (who was arguing for the companies) whether there are rules
of statutory construction that should guide the Court in this case, such as the
canon of constitutional avoidance. Later, Justice Kennedy asked directly what
should happen when granting an accommodation for the companies would shift
costs onto employees. Justice Kennedy asked whether the employer's interests
should simply trump in such situations.

Of course, Justice Kennedy also had questions for the government.
Several of these concerned the government's claim that for-profit corporations
cannot bring religious freedom claims, either as a threshold matter or as a
consequence of the compelling interest analysis. Especially after Justice Kagan
expressed doubt about the contention that for-profit corporations are barred
from making such claims as a threshold matter, the government's argument
against the ability of for-profit corporations to ever bring or prevail in
religious liberty cases seemed to face serious opposition. Near the end of the
argument, Justice Kennedy also asked the government whether its position would
mean that a for-profit corporation could be forced to pay for abortions. Other commentators have highlighted that question,
but it seems to me at least possible (though not certain) that Justice Kennedy
was addressing the issue of whether for-profit corporations could bring a claim
at all -- suggesting that they could -- and that he was not offering a
slippery-slope reason to think that Hobby Lobby's claim should prevail on the
merits.

Justice Breyer asked the government why the answer to the concern
with third-party employees was simply for the insurance providers or the
government to carry the costs. Why wouldn't this be a less-restrictive means of
pursuing the government's ends? I don't believe Justice Breyer was expressing
sympathy with this argument -- he explicitly disclaimed betraying a point of
view -- but instead he was ensuring that the concern was addressed. Solicitor
General Verrilli responded that religious objectors would simply raise a
challenge to that arrangement too. He seemed to have in mind other situations
where religiously-affiliated nonprofits have balked at signing a form or even
just asking for an exemption, on the ground that such an action would then
trigger coverage for contraception by a provider or by the government. (In his
rebuttal, Paul Clement replied that he did not know whether these particular
companies would object to that accommodation, which they have not been
offered.) Solicitor General Verrilli also argued that such an arrangement for
all religiously-objecting for-profit companies could expose the government to
significant costs.

There were other notable moments as well. Several of the justices
took seriously the argument, which I first saw here in a post by Marty Lederman, that the
contraception rule does not impose a burden at all, because it would be as
cheap or cheaper for employers to simply stop providing health insurance
altogether. The resulting tax -- Justice Sotomayor specified that it is not a
penalty, recalling the health care cases -- would be about two thousand dollars
per employee per year, which is less than the roughly four thousand dollar
per-employee per-year cost of providing health insurance, she said. Even
assuming employers must raise salaries somewhat to compensate for the loss in
benefits, that could be as cheap or cheaper than providing health insurance.
Employees could then purchase coverage on the exchanges. Justice Kennedy
(twice) asked Paul Clement to assume the cost of eliminating health insurance
coverage was equivalent to providing it, a "wash" as he put it, and
then asked what would be the result for his argument. Paul Clement (twice)
responded that the cases had not been litigated that way, and also pointed out
that providing health insurance was also seen to be a religious good, if not a
religious mandate, by the companies.

So although it would be foolish to predict the outcome of the
case, people concerned with shifting burdens to women employees have some small
reason to be more optimistic than before the argument.

Nelson Tebbe is Professor of Law at Brooklyn Law School. You can reach him by e-mail at nelson.tebbe at brooklaw.edu